The Importance of Flexible Spending Accounts

What is an FSA?

A Flexible Spending Account (FSA) is an employer-sponsored program that allows each employee to put pre-tax dollars aside for future medical costs. Eligible health care for your or your dependents will be reimbursed through this program.


How Does It Work?

Figure out the costs of copayments, deductibles, prescriptions and other health care expenses you may have over the year. Then, elect that money towards your FSA. The money will go from your salary and into the Flexible Spending Account before taxes are withheld. The FSA fund is tax free.

According to FSA Feds, “your election is only effective for one Benefit Period,” meaning you must re-enroll each time you would like to participate.

How Much Can I Elect?

You can elect up to $2,550 per year into an FSA. They are only available within job-based health plans, and your employer can make contributions towards that amount.

According to, there are limits, grace periods and carry-over terms that must be followed. You should use all money in your FSA account over the period of one year. If you don’t, these guidelines must be followed:

  • A grace period of 2 ½ extra months can be allowed to use up the money in the account
  • You may carry over no more than $500 per year to use in the following year

You are only allowed to opt for one of these options, but it’s not required for your employer to offer either one. It’s best to use up the money in your FSA account before you lose it for good.

What Expenses Are Covered By an FSA?

An FSA can cover many medical expenses. You can use it towards:

  • Deductibles
  • Copayments
  • Prescription medications
  • Medical equipment (e.g., crutches)
  • Medical supplies
  • Medical devices (e.g., blood sugar test kits)

But it cannot be put towards insurance premiums.

Who is Eligible for an FSA?

According to, “Generally, to be eligible for an FSA, you just have to be an employee of an employer who offers an FSA. … You can have several insurance plans or none. You’re not required to have health coverage to be eligible for a health FSA.”

HELP! I’ve Got Money Left Over!

To avoid losing money in your FSA, you should constantly keep track of what is being spent on medical costs and know your balance. In the event that you do have money left in your FSA at the end of the benefit period, you have some options.


  • Get that treatment you’ve been putting off (e.g. dental work or new glasses)
  • Get a massage! Some massages and therapies can be considered medical expenses if they are being used to ease back or neck tension – just have your masseuse or chiropractor include what they are treating on your receipt

If you have some FSA Funding you need to spend, don’t lose it! Come see me for a massage – I’d be happy to treat that back pain you’ve been avoiding for months.